Correlation Between Grayscale Bitcoin and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Grayscale Bitcoin and Tidal Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Grayscale Bitcoin and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grayscale Bitcoin Trust and Tidal Trust II, you can compare the effects of market volatilities on Grayscale Bitcoin and Tidal Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Grayscale Bitcoin with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Bitcoin and Tidal Trust.
Diversification Opportunities for Grayscale Bitcoin and Tidal Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grayscale and Tidal is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Bitcoin Trust and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and Grayscale Bitcoin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Grayscale Bitcoin Trust are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Grayscale Bitcoin i.e., Grayscale Bitcoin and Tidal Trust go up and down completely randomly.
Pair Corralation between Grayscale Bitcoin and Tidal Trust
Given the investment horizon of 90 days Grayscale Bitcoin Trust is expected to generate 1.24 times more return on investment than Tidal Trust. However, Grayscale Bitcoin is 1.24 times more volatile than Tidal Trust II. It trades about 0.32 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.23 per unit of risk. If you would invest 5,030 in Grayscale Bitcoin Trust on August 26, 2024 and sell it today you would earn a total of 2,857 from holding Grayscale Bitcoin Trust or generate 56.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grayscale Bitcoin Trust vs. Tidal Trust II
Performance |
| Timeline |
| Grayscale Bitcoin Trust |
| Tidal Trust II |
Grayscale Bitcoin and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grayscale Bitcoin and Tidal Trust
The main advantage of trading using opposite Grayscale Bitcoin and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Bitcoin position performs unexpectedly, Tidal Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tidal Trust will offset losses from the drop in Tidal Trust's long position.| Grayscale Bitcoin vs. Grayscale Ethereum Trust | Grayscale Bitcoin vs. Riot Blockchain | Grayscale Bitcoin vs. Marathon Digital Holdings | Grayscale Bitcoin vs. Coinbase Global |
| Tidal Trust vs. Grayscale Bitcoin Trust | Tidal Trust vs. Siren Nasdaq NexGen | Tidal Trust vs. Grayscale Bitcoin Mini | Tidal Trust vs. First Trust SkyBridge |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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